Vol. 27, No. 1 (Spring
The WTC Emergency Airline Subsidies
Edward M. Miller
Following the September 11 crashing of two airplanes into the
World Trade Center (WTC) by terrorists, the US government adopted
a large airline subsidy with the apparent goal of preserving
essential airline services. However, economic analysis shows
that it is unlikely to achieve this goal because it leaves marginal
cost and marginal revenue unchanged. Thus, it is unlikely to
affect the level of airline service and unlikely to maintain
airline employment. In essence there was a large transfer of
money to the industry for very little, if any, public benefit.
A very generous victim assistance program was also adopted.
No rational reason can be found for a program that assists these
victims more than those killed or injured in other disasters.